Over the past year, rents in some US cities have soared 35%, according to a recent Redfin report, fueled in part by rising house prices that have forced potential buyers into the rental market, increasing demand and leading to higher rates.
While Utah often leads the United States in terms of growth and rising real estate prices – Ogden, Provo and Salt Lake City have recently made the top 10 most overvalued markets in the country – l Last year, Beehive State saw rent increases in line with the national average. .
According to the Redfin report, of the 10 metropolitan areas in the United States that have seen the largest year-over-year rent increases, most are adjacent to New York or Florida. They were:
- Austin, Texas, which saw a 40% year-over-year rent increase
- Nassau County, New York, 35%
- New York, New York, 35%
- Newark, New Jersey at 35%
- New Brunswick, New Jersey at 35%
- Miami, Florida at 34%
- West Palm Beach, Florida, at 34%
- Fort Lauderdale, Florida, at 34%
- Jacksonville, Florida, at 31%
- Portland, Oregon, at 29%
Nationwide, rents are up about 14% in 2021, according to Redfin. Most renters in the United States pay an average of $1,877 per month.
Housing prices in Utah are crazy – what about the rent?
In Utah, most statewide numbers point to a 10% to 15% increase in rent in 2021, with the Salt Lake City metro area seeing the largest increase. Consider this data from CoStar:
- The Salt Lake City metro area saw a 17.7% increase in year-over-year rents
- Provo saw a 16.2% increase
- St. George saw a 10.5% increase
Just because these increases are in line with the national average doesn’t mean Beehive State isn’t experiencing an unprecedented rise in rents. According to Apartment List, this nationwide increase in 2021 was record high.
Experts say there are several reasons for the spike, but national demand that outstrips rental housing supply is a driving factor.
Demand in Utah is being fueled by booming real estate markets, which in turn are forcing many potential buyers to rent instead. About 34% of Utah residents are renters.
“It’s never been higher,” said Paul Smith, executive director of the Utah Apartment Association.
Smith said the rise in rents can also be attributed to a lull in 2020.
“Most places in this pandemic year haven’t raised rent at all. So it makes sense that next year will be record-breaking,” he said.
Nationally, supply chain issues and lumber costs are making it difficult to keep up with rental demand. Apartment complexes are also struggling to find workers amid labor shortages.
Why Utah’s rent hasn’t gone up like other US cities
Smith says one of the reasons Utah hasn’t seen rising rents despite rising housing prices is because of the type of tenancies that are common in the state. Of Utah’s roughly 300,000 rental units, more than 100,000 are single-family homes, Smith said. Another 50,000 are duplexes or triplexes.
That leaves about 150,000 rentals that are in buildings or complexes that have multiple units, which are typically professionally managed, rather than what Smith and others call “mom and pop landlords.”
“They can raise rents more slowly than professionals, where that’s their livelihood and they have investors and shareholders and they have to drive prices up,” he said.
Utah is also growing, adding to its rental inventory, which helps meet demand. Other communities, such as those in Miami or New York, lack physical space.
“There is still more demand than there is supply. But we are not standing still. We are adding inventory,” Smith said.
Housing experts, including Smith, don’t expect rents to drop anytime soon. One-year or six-month leases ensure that rates won’t drop quickly. And inflation has made historic rent increases – hovering between 3% and 7% a year – insufficient.
“Yes, rent increases will continue,” Smith said. “They won’t be as big as this year, but just to keep up with inflation now they need to be at least 7% or 8%. A 7% or 8% increase is now stable.